Unless the new climate legislation is accompanied by a large suite of complementary policies and programmes we’ll never get the low carbon economy we need, says Rod Oram

With Parliament finally making the Emissions Trading Scheme fit for purpose this week, we now have the two core legislative mechanisms we need to respond to the climate crisis. The other is the zero carbon Act approved last November.

It’s taken us 20 years to get to this starting point. Wasted efforts along the way include the past 12 years we’ve had an utterly ineffective ETS. At least, the cap-and-trade scheme finally has a cap on emissions which will deliver a more realistic carbon price.

However, these two mechanisms only give us some tools. If we don’t apply them through a large suite of complementary policies and programmes we’ll never get the low carbon economy we’ve got to have.

For example, the current market price of carbon is around $30 a tonne. Next year, the Government will lift the fixed price option for meeting emission obligations from $25 to $35.

That would increase household budgets by $1.10 per week for the 20 percent of households with the lowest incomes and $1.60 for the highest 20 percent, according to the Government’s ETS consultation document last year. That assumes the full increase in the cost of carbon is passed through to consumers and they made no change in their consumption patterns. Hopefully for the sake of progress neither condition would apply in practice.

But this Government, along with its predecessors over the past 20 years, has failed to deliver any meaningful complementary measures because the politics of them have been so dysfunctional.

Last July, for example, the Labour-led Government proposed a comprehensive policy to incentivise the purchase of lower emissions, more fuel efficient and electric vehicles. The policy would have also set fuel efficiency standards for New Zealand by 2025. We are the only developed country to lack them. But it dropped the plan in February because its coalition partner, NZ First, vetoed it.

Both NZ First and National attacked the policy, claiming it benefitted higher income and urban people while penalising lower income and rural people. Their argument was flat-out wrong, which was perfectly clear from the analysis on which the policy was based. Meanwhile, fuel hungry twin-cab utes retain their exemption from fringe benefit tax, which is an incentive to buy them.

Similarly, this Government’s Covid recovery stimulus spending is remarkably light on infrastructure projects that also deliver environmental and climate benefits. The ones announced this week were pitifully few and small.

In the absence of government action, there is thankfully some movement elsewhere from some of its agencies. This week, for example, NZ Trade & Enterprise and ACC announced some worthwhile goals on climate action. ACC was coming from far behind, as I described in this column last December 

But business leaders have gone rather quiet on their own plans and on pushing government to do more. This is in marked contrast to the Climate Leaders Coalition’s strong lobbying last year for the zero carbon Act. Businesses must become far more effective public champions for climate action.

While the points above apply mainly to the half of our total emissions generated by households, businesses and industry, similar trends are at work on the other half generated by farming.

Late last year the Government accepted a proposal from the primary sector for a five-year joint working group on how to measure, reduce and price emissions on farm. He Waka Eke Noa is up and running, as two of its leaders described in a webinar this week organised by the NZ Agricultural Greenhouse Gas Research Centre. It was the second in a six-part weekly series which is offering rich insights.

Meanwhile, the Centre recently launched AgMatters, a website offering farmers a wealth of practical advice and case studies on how they can further reduce their farms’ emissions in cost effective ways.

But farmers have a long journey ahead. How much of a challenge would it be to take climate action within five years? asked a survey in BNZ’s latest agribusiness report. Only 4 percent of farmers responding said they already were; 8 percent said it would be no problem to do so; 17 percent said not overly a problem; 34 percent said slightly; and 36 percent said it would be extremely challenging.

There is a far bigger problem, however. This report, in common with virtually all others from the primary sector, pays insufficient attention to the great debates overseas about food, farming and land use, and their impact on the health of people, ecosystems and climate. Our sector complacently tells itself, the Government, customers and public that it is the most efficient, lowest emissions, producer of high value meat and dairy products in the world, and there will always be eager consumers for its products.

The global revolution in food and farming is familiar to regular readers of this column, with my most recent update seven weeks ago. But a lot’s happened since, particularly with regenerative agriculture. This is the farming discipline which works more closely with nature, thereby helping ecosystems recover, which in turn makes the farming more resilient in economic and environmental terms.

… the 13 largest dairy processors in the world, which includes Fonterra, generate the same volume of greenhouse gas emissions as the UK’s entire economy.

This week, Unilever, the Anglo-Dutch multinational which is one of the world’s largest food processors, announced a Regenerative Agricultural Code which over time will apply to all its farmers, backed by a euro 1 billion Climate & Nature Fund. Its goal is to make all its products net zero emissions by 2039.

For insights on regenerative ag in the US, the UK’s Forum for the Future offers this recent report and this primer on regen ag. The Forum’s co-founder was Sir Jonathon Porritt, and he remains a trustee. He was also the co-founder with Sir Rob Fenwick two years ago of the Aotearoa Circle, a business and government initiative to put natural capital at the centre of all we do here.

The global pressure on existing farming practices is intensifying rapidly. For example, this week the US-based Institute for Agriculture and Trade Policy released its latest analysis. It showed that the 13 largest dairy processors in the world, which includes Fonterra, generate the same volume of greenhouse gas emissions as the UK’s entire economy.

In reply, Fonterra’s says its emissions are only half the volume reported by the IATP. But that doesn’t let Fonterra off the hook given it’s facing growing competition from non-dairy, low emissions milk.

There is some progress here on, for example, regenerative ag and the wider, deeply inter-connected issues of food, farming, ecosystems and society. The first Food System Dialogue was held here as part of the global FSD initiative which to date has involved some 1,800 people in 21 countries.

But the big local disappoint of the week was the Future of Food report from Koi Tu – the Centre for Informed Futures, founded by Sir Peter Gluckman, a former Chief Science Adviser to the Prime Minister.

… if a dollar or two a week per household really is too much now, then it will always be and National will never agree to it.

It did make fleeting reference to global trends but drew no insights from them. Instead its central argument was we would farm more sustainably if we got our act together on science and technology and smartened up our marketing. But those are second order issues. It largely ignored the first order issue of what the future of sustainable food will be.

Politicians were just as disappointing this week, led by National voting against the ETS legislation. It said it supported the bill but Covid-hit households and business couldn’t afford the resulting increase in carbon costs.

If it wins the election and leads the next government, it says it will delay implementing the ETS reforms for a year. But if a dollar or two a week per household really is too much now, then it will always be and National will never agree to it. Yet with every year we delay, the cost of acting on the climate crisis, and repairing the damage it does, only escalates.

So, once again the only course for action for the public is to take personal responsibility and action on the climate, work with others, push politicians ever harder to act, and vote for the parties showing the least denial.

Rod Oram is a weekly columnist who covers climate, economics and politics.

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